SOUTH PORTLAND — The city’s Economic Development Committee is seeking to repurpose an existing fund to help start-ups and get over the hurdle of launching a new business.
The proposal, along with one from the Affordable Housing Committee that would establish a lending program for low-income housing tax credit projects, were presented by Assistant City Manager Josh Reny during a City Council workshop Dec. 27.
According to Reny, the city maintains two Revolving Loan Funds – one business-oriented, the other geared towards housing.
Neither fund has been well utilized in the past decade, City Manager Scott Morelli said in a memo to the council, because the city has not been actively promoting them.
The Business Development RLF has accumulated about $50,000 since it was established in 2010, according to Finance Director Greg L’Heureux, and is capitalized with tax increment financing funds.
According to Morelli, the goal is to find more partners and use available funding in the city’s business RLF to “supplement and leverage” a greater investment in the community.
To that end, the committee has discussed partnering with organizations such as Community Development Finance Agencies, Catholic Charities, Greater Portland Council of Governments and other financial institutions and nonprofit organizations to provide support and resources to “aspiring entrepreneurs.”
Now, the EDC needs council support to invite formal proposals for how a partnership could best promote and support the city’s entrepreneurs.
Once proposals are received and vetted, the EDC would return to the council with specific recommendations on how to restructure the RLF program or replace it with a new program.
“It’s low risk,” Reny said. “We’re just asking for proposals.”
Councilor Kate Lewis said she’d prefer restructuring to incorporate grant or loan money for energy efficiency improvements to existing businesses.
“I’d far rather see us make that a stronger program and see it all the way through than start a whole new program of business incubation to bring new businesses into the city,” Lewis said.
Councilor Misha Pride agreed. “If one of the options were to provide these loans to businesses to increase sustainable practices,” he said, “… that’d be something I’d fully support.”
The Affordable Housing Committee has been working for over a year on a draft policy that would establish an Affordable Housing Trust Fund. Under the terms, 30 percent from the sale of city-owned property would be pooled to support low-income housing tax credit projects through grant and loan programs, tax incentives and zoning modifications.
Councilors Pride and April Caricchio said they’d prefer issuing loans, rather than grants, to developers.
The trust fund would replace the housing RLF, which doesn’t have an associated management plan, and be modeled after the South Portland Land Bank.
This policy, Morelli said in a memo to the council, would be “largely symbolic,” but an “important signal” to prospective affordable housing developers.
However, it does not compel the city to provide incentives or support to any specific project. All appropriations from the AHTF would have to go through the council and the approval of any TIF would still require a public hearing and formal council approval.
Morelli noted that the city has already been implementing these practices as an unwritten policy during the past two years.
With the council’s feedback, the Affordable Housing Committee will draft an operational or management plan to bring back to the council.
“This is very preliminary,” Reny said. “This truly is the guiding policy document, but it really needs to go hand-in-hand with a management policy with the specifics.”
Lewis said conceptually, supporting small businesses and affordable housing “sounds good,” but she needs “a lot more time with the details” to drive what they’ll look like “in real life.”
Both the economic development and affordable housing committees will consider councilors’ recommendations to draft more detailed proposals to present within the next several months.